A recent report – the 20th-anniversary report, as a matter of fact – from the Harvard Joint Center for Housing Studies found that the U.S. market for home improvement and repair is now well over $400 billion annually as the housing stock faces pressure to meet the nation’s growing and changing housing needs.
The report in its entirety is fascinating, but here are 10 of the more compelling findings, facts, and statistics:
- The Home Remodeling Market Has Grown More than 50 Percent Since the Recession Ended
“With new construction still slow to recover from historic lows, almost 80 percent of the nation’s 137 million homes are now at least 20 years old and 40 percent are at least 50 years old. The aging of the US housing stock has been a boon to the home improvement industry, helping to lift the remodeling market to nearly $425 billion in 2017.”
- Remodeling Spending Continues to Contribute a Dominant Share of Residential Investment
“With the modest recovery in homebuilding, the improvement and repair share of residential investment has held above 55 percent. Indeed, starts of single-family housing averaged just 610,000 units annually from 2008 to 2017, the weakest decade of production in the postwar period. Given the challenges of building affordable homes in many markets, the remodeling share of residential spending will likely remain well above the historical average.”
- Owners Have Invested Heavily in Improvements to Units Previously Rented or Vacant
“The number of housing units switching from either rental or vacant status to owner occupancy jumped from 5.0 million in 2010 and 2011 to more than 6.6 million in 2016 and 2017, according to Joint Center analysis of the American Housing Surveys. With construction of new housing lagging behind growth in homeownership demand, these converted units make up a growing share of the owner-occupied stock.”
- Owners Generally Spend More on Home Improvements in Markets Where House Price Appreciation Is Strong
“The relationship between rising house prices and home improvement spending is clear at the metropolitan area level. In metros where house price appreciation has been strong over the past decade, owners have typically spent substantially more on home improvements than owners in metros where prices have not yet fully recovered. But as house prices rebound in markets decimated by the crash, home improvement activity in these metros is likely to pick up as well.”
- Younger Owners Account for a Higher Share of Market Spending in More Affordable Metros
“In areas of the country where home ownership is relatively affordable, however, younger households do contribute significantly more to local improvement spending. This finding suggests that younger households would likely play a larger role in the remodeling market if homeownership affordability were less of an obstacle.”
- The Growing Number of Older Owners, Along with Higher Average Spending, Have Lifted Their Improvement Expenditures
“Over the past 20 years, the number of homeowners age 55 and over surged 60 percent from 26 million to more than 42 million, increasing their share of all owners from 40 percent to almost 55 percent. Not only are there significantly more older homeowners, but average spending among this age group also increased to 57 percent between 1997 and 2017, to nearly $2,800.”
- After Years of Decline, Both the Number of Young Homeowners and Their Spending on Home Improvements Have Finally Turned Up
“As challenging as the employment and housing markets are for younger households, the number of homeowners under age 35 did rise 6 percent between 2015 and 2017 to 7.3 million—the first increase in a decade. Improvement spending among this age group grew even faster, climbing 20 percent in real terms over this period to about $22 billion.”
- Replacement Projects Take Up a Larger Share of Homeowner Improvement Budgets Than Before the Recession
“Historically, the share of homeowner spending on replacement projects (including exterior and interior replacements and systems and equipment upgrades) has matched the share of spending on discretionary projects (including kitchen and bath remodels, room additions, and outside attachments) at about 40 percent of total expenditures. Coming out of the last downturn, however, the replacement share climbed to almost 50 percent, where it has remained.”
- Spending for Disaster Repairs Is Trending Up Across the Country
“As natural disasters become more frequent and more devastating, national spending on the restoration of damaged owner-occupied homes continues to grow in both absolute terms and as a share of improvement expenditures. Homeowner outlays for disaster-related improvements exceeded $27 billion in 2016–2017, nearly double the two-year average of $14 billion two decades earlier.”
- As Project Size Increases, Homeowners Rely Less on Savings to Finance Improvements
“As project scope increases, however, homeowners are much more likely to tap home equity or other forms of financing to cover the costs. The share of projects paid for with cash steadily shrinks from 78 percent of improvements costing less than $10,000, to 60 percent for those costing $10,000 to $49,999, to 54 percent for those costing $50,000 or more.”
If home improvements and repairs aren’t your thing or if it’s just time to find a new house to call home, let the experienced real estate professionals guide through the process.
Because at DeLeon Sheffield Company, ‘We’re More Than Realty; We’re Family.’
